Techniques For Negotiating The Best Price When Looking For Industrial Warehouse Properties For Lease
Before you begin searching for a good for your company, you need to get educated about the commercial warehouse leasing process. Being ready should keep you from making rash decisions and costly mistakes thatyou will probably regret in the future. Below are some insider tips to help make an informed choice when leasing a commercial warehouse space your company
Initiate the process of hunting commercial space at least 6-12 months before your existing lease expires or before your ideal move-in-date. Finding the right space and negotiating the deal alonewill take 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will need some sort of improvements that the time needed will depend on the scope of work.
completely examine your business’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with the commercial real estate terms and definitions. Different landlords state and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to get more information.
If you’re not knowledgeable about the commercial property leasing process or the current market conditions then consider engaging the help of a tenant representative. Their services don’t cost anything since building owners compensate all of the rental commissions. The landlord representative will have an expert listing agent helping them so it would be a great idea for you to have one too.
Physically visit all of the properties that meet your needs so thatyou can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions about who owns the property, property amenities, required lease duration, how much the landlord is willing to give in tenant construction allowances, etc..
Do not settle for the first commercial space you think is acceptable for your needs: continue searching until you have at least two to three other options. These extra options will work to your benefit since you will know what to expect throughout the lease negotiations and you will gain more leverage with numerous building owners competing for your company. They also give you something to fall back to whether the discussions to your first choice go sideways.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever need to have a landlord representative’s verbal note. Everything needs to be in writing.
To help you decide what property is most suitable for your company, prepare a spreadsheet to do an apples to apples comparison of each property. Some of the things you should put into consideration include the dimensions of the distance, the asking base rental rates, the necessary lease term, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to take note about the pros and cons of each property. If you’re budget conscious then you can quickly narrow down the list by simply calculating the monthly base rents for each property then removing those that are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate and any operating expenditures then dividing by 12.
If some of the commercial properties need tenant improvements then it is crucial that you determine what changes you want on each and get bids from contractors. This way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you will need to pay over and beyond what the landlord is willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to go back to each landlord to negotiate extra concessions. Be certain you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in you signing a contract thatyour business cannot live up to.
After discussions are finalized and you’ve made your selection now it is time to have the landlord offer you the first draft of the commercial lease contract.
Now it is time to reassess the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant agent then they could review the lease with you also. Industrial lease language could be negotiated. If you don’t like particular lease items or want to propose new language now is the time to do so.
When the end of lease contract negotiations has ended the landlord will supply you a draft of the lease to sign.
There are many more things to consider when renting commercial real estate however these suggestions will help get you started. If you’re a new company renting commercial space for the first time or an existing company who has just leased 1 or two spaces then consider getting help from a tenant representative. Their services do not cost you anything and you will save a great deal of time and money.